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Callnote premium safe review3/29/2023 ![]() This portfolio (which largely replicates the Fed’s under QE), along with the bank’s deposit base, unsurprisingly took a hit as Jay Powell’s Fed, misdiagnosing the cause of our macro-economy’s recent CPI inflation (it is supply- and profiteering-driven this time, not wage- or salary-driven), began raising interest rates with greater abruptness than at any time in the last 45 years (an astounding 450 basis points in a year). SVB’s portfolio, for its part, appears also to have been precisely what we should want to see – prudently evaluated loans to this same tech clientele on the one hand, none of which were in trouble, imparting to SVB something of the flavor of a tech credit union – and US Treasurys – safest of safe assets – on the other hand. Where the latter are concerned, US Treasurys are (almost literally) the gold standard, the safest of the safe and the most liquid of the liquid – so much so, in fact, that they are accounted ‘ near-moneys’ deserving of literally zero risk-weightings in all systems of risk-based capital regulation. They must instead prudently invest in actuarially sound business loans in the productive sectors on the one hand, while investing any additional holdings in safe, readily liquidated assets on the other hand. These repositories, for their part, must also refrain from mere gambling activity with depositors’ funds. ![]() ![]() Such ‘makers’ are producing, not ‘taking’ or speculating, and accordingly need repositories in which to hold ‘patient capital’ as their businesses get underway. The typical depositor in such an institution is someone who isn’t gambling on price movements in secondary financial or tertiary derivatives markets, but is aiming instead to introduce and produce new product lines or services in primary markets – contributions to the ‘real economy’ that improve our material lives over time.
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